The signal involved in the targeting of pro-opiomelanocortin (POMC, pro-ACTH/ endorphin) to the regulated secretory pathway was identified. Truncated POMC/CAT constructs transfected into AtT-20 cells indicated that the N-terminal 26 amino acids of POMC which form a hairpin loop stabilized by two disulfide bridges are sufficient and necessary for targeting POMC to the regulated secretory pathway. POMC mutants with the entire 24 amino acid hairpin loop or both the disulfide bridges deleted, failed to be targeted to secretory granules. However, a mutant truncated to 11 amino acids with one disulfide bridge to form a mini-hairpin loop was correctly sorted. These findings indicate that the sorting signal is encoded by a specific conformation. Pituitary secretory vesicle enzymes involved in the processing of POMC were studied. The Ca++ activated aspartic protease from bovine intermediate lobe secretory granules, POMC converting enzyme (PCE; EC 3.4.23.17) which cleaves POMC at paired basic residues has been shown to cleave at a monobasic residue of anglerfish pro-somatostatin II (aPSSII) to generate somatostatin 28. A yeast aspartic protease (YAP3) has been purified and shown to have a similar inhibitor profile, size and specificity for the paired basic residues of POMC and the monobasic residue of aPSSII as PCE. An antibody against YAP3 cross-reacted with PCE on Western blot and in a radioimmunoassay. Immunocytochemistry using this antibody showed staining in cells of the intermediate lobe and anterior lobe where PCE has been found. PCE appears to be homologous to YAP3 structurally and in catalytic activity. Two prohormone processing enzyme candidates, PC1 and PC2 belonging to the subtilisin-related family of serine proteases, were shown to process POMC, protective antigen (PA) of anthrax and pro-TRH correctly at paired basic residues in vitro. Use of PA substrates mutated at the tetrabasic cleavage site revealed the importance of the secondary and tertiary structure in dictating the specificity of processing. PC1 and PC2 mRNA have been colocalized with TRH immunopositive neurons by in situ hybridization and immunocytochemistry, supporting a role of these enzymes in processing pro-TRH in vivo.